TMI Blog1983 (4) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ant question to be determined in this bunch of four writ petitions (Nos. 883, 2196, 2367 and 2376 of 1976). Messrs. Sirsa Industries, Sirsa, the petitioner-firm, is engaged in the business of cotton ginning and pressing factory at Sirsa, whereas the second petitioner-firm, M/s. Haryana Cotton Corporation, Sirsa, is doing business in cotton on commission basis. Both the firms are liable to pay Central sales tax on the sales of cotton. They have been collecting Central sales tax from their constituents on the sales of bales of cotton in the accounting years in dispute, but did not pay the same to the State Government. Both the petitioner-firms follow and have previously been following the mercantile system of accounts. The amounts realised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 972-73, 1973-74 and 1974-75 were issued to M/s. Haryana Corporation, Sirsa (hereinafter called " petitioner No 2. It has filed Civil Writ Petitions Nos. 2367 and 2376 of 1976 for quashing these notices. On the authority of the decision of the final court in Indermani Jatia v. CIT [1959] 35 ITR 298 (SC), Mr. P. S. Jain, the learned counsel for the petitioners, has contended that the mercantile system of accounting is substantially different from the cash system of book-keeping. Under the former system, profits and gains are credited whenever they accrue even if they are not actually received. Similarly expenditure items for which legal liability has been incurred is debitable, even though these items may not be actually disbursed. In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected by them on account of Central sales tax were shown on the liabilities side for each year like any other trading liability towards the creditors of petitioners Nos. 1 and 2. The money was thus inextricably mixed up with the other amounts of the petitioners Nos. 1 and 2 and was thus being utilized by the assessee in their trading and business. The Central sales tax was part of the trading receipt which entirely went into the business of petitioners Nos. 1 and 2, who have realized Central sales tax from their constituents. However, they have not paid this tax to the State Government. These amounts have been mixed up with the other trading receipts and utilized for their business. The decisions cited by Mr. Jain may be taken to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to form part of its trading or business receipt and as such liable to be included in his business income. He could claim the deduction only when he paid it to the Government. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt ". It is sought to be urged by Mr. Jain that the assessee in Chowringhee Sales Bureau's case [1973] 87 ITR 542 (SC), did not follow the mercantile system of accounting. It has not been said in the body of the judgment. It is evident therefrom that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection, reference may be made to Maharaj Kumar Kamal Singh v.CIT [1959] 35 ITR 1 (SC), CWT v. Imperial Tobacco Co. of India Ltd. [1966] 61 ITR 461 (SC) and V. Jaganmohan Rao v. CIT [1970] 75 ITR 373 (SC). The last submission of Mr. Jain has simply to be stated to be rejected. If certain set of facts can form the subject-matter for action under two separate and different statutory provisions, it is for the competent authority to decide under which particular section he has to take action. It is the petitioners' (1 and 2) case that the notices which are the subject-matter of Civil Writ Petition No. 883 of 1976 were beyond time prescribed for taking action under s. 147 of the Act. They were, however, within limitation, prescribed for proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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